Office firms, office workers, and agricultural firms compete for land. Their respective bid rent functions are given by: office firms Ro = 201-5x
office workers Rw = 180-2x, and
agricultural firms Ra = 140
where R denoted the bid rent and x the distance from the city center
a. Where does each bidder locate? (Calculate the respective distances from the city center)
b. Now assume that the city imposes a fuel tax on offices and one office workers resulting in an increase in their corresponding marginal transportation cost by 1. How does this change your answer to (a)?
c. Now assume that, in addition to (b), the entire revenue from the fuel tax is paid to office worker (not to offices). The government send out checks resulting in an income growth of $3 for each worker. How does this change the respective locations.